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Four Utility Stocks Worth A Closer Look


While not usually popular, these companies could lead to big profits.


Many of you will recall my bearish view of the utility stocks in the beginning of this year. While the trade took quite a bit of patience, it paid off handsomely. Well, we may be seeing a repeat of the trade that I want to bring to your attention. Several charts have started popping up on my grid, and with the current market weakness, I would be amiss to not follow the money flow.

While typically not your market movers or high-volume leaders, utility stocks are showing some bearish characteristics that a wise trader might want to invest a dime in and investigate further. I'll use daily charts to highlight current movement, as traders may want to capitalize on opportunities in conjunction with the current broad market weakness.

FPL Group
The Trade: Short FPL on break of neckline at 55.

Click to enlarge

A chart that has struggled for months has been FPL Group (FPL). Bouncing around in the high 50s trying to gain traction, market internals have finally wrestled FPL into submission, making the current setup a possible shorting candidate.

FPL is fighting a load of overhead resistance around 58.50, having shot lower on four separate occasions from this area.

The tail end of this chart has created a head-and-shoulders pattern which is currently entering the neckline, and a break of this area around 55.50 would be an opportunity for a trader to go short, with a stop above resistance at 58.50.

Dominion Resources
The Trade: Short on break of 33.00 or formation of second lower high.

Click to enlarge

Dominion Resources (D) is setting up a powerful shorting opportunity; and flipping the switch on this stock at the right time might just light up your portfolio. First, notice the stair-step action of higher lows and higher highs over the past few months as D ratcheted ever so gracefully higher.

However, key action just last week has seemed to put the brakes on this run, as a lower high and now a lower low have been put in place.

This reversal of fortune should be a trader's initial sign to start looking for profits in either an intermediate or shorter time frame.

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No positions in stocks mentioned.

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